Q. What are some deeper considerations concerning the fees we charge beyond simply what we set?
A. There can be more to consider regarding fees than simply their level. Some important considerations concerning fees include:
Benchmarking. Be aware of when the plan fees were more recently benchmarked; many experts suggest that this be done every three years.
Fee Arrangement. Understand the fee arrangements that are the most common—such as bundled, basis point/per participant and flat dollar—and know which the plan follows. Consider whether it is the best fee arrangement for the plan to use.
Revenue Target. Know the plan’s revenue target. If revenues do not match that figure, verify:
- that if what the plan is making from fees exceeds the target;
- that any expenses paid from the excess are eligible;
- that an appropriate method is being used to return the excess to the participants; and
- that the plan sponsor verify how participants and the company are charged if there is a deficit.
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